- The Australian dollar has been supported by improving market sentiment and solid commodity prices.
- The Australian dollar rose on strong trade data from China and Beijing's efforts to stabilize the yuan.
- The US dollar fell after December's US producer price index was disappointing.
The Australian dollar (AUD) remained stable on Wednesday after gaining for the second day in a row against the US dollar (USD). The AUD/USD pair benefited from risk-on market sentiment supported by positive trade data from China, the Chinese government's efforts to stabilize the renminbi, and rising commodity prices. Traders are awaiting the release of Australian jobs data later this week for further insight into the Reserve Bank of Australia's (RBA) policy direction.
Investor confidence has increased as President-elect Donald Trump's economic team considers a gradual increase in import tariffs. This optimism supported risk-sensitive currencies such as the Australian dollar and contributed to the rise in AUD/JPY.
Traders assessed data revealing consumer confidence has fallen for the second consecutive month, likely due to the weakening of the Australian dollar against the US dollar. In January 2025, Australia's Westpac Consumer Confidence Index fell by 0.7% to 92.1 points, reflecting continued consumer pessimism.
The decline in consumer confidence has raised concerns about the outlook for interest rates and Australia's broader economic health. Markets currently price in a 67% chance that the Reserve Bank of Australia will cut the 4.35% cash rate by 25 basis points in February, with the full rate cut expected to be completed by April.
Australian dollar gains as US dollar falls on PPI data
- The US dollar index (DXY), which measures the US dollar's performance against six major currencies, is hovering around 109.20. Greenback faced difficulties following disappointing US December Producer Price Index (PPI) data. Market participants will focus on US Consumer Price Index (CPI) inflation statistics to be released later on Wednesday.
- The U.S. final demand producer price index rose 0.2% month-on-month in December, slower than the expected 0.3%, after rising an unrevised 0.4% in November. Following a 3.0% rise in November, PPI rose 3.3% year-on-year in December, the largest increase since February 2023. This measure was below the consensus of 3.4%.
- U.S. non-farm payrolls (NFP) increased by 256,000 in December, significantly exceeding the market estimate of 160,000, compared to the November revised figure of 212,000 (previously 227,000). people).
- Last week, Fed Board member Michel・Mr. Bowman also added his voice to the chorus of Fed speakers.
- Kansas Fed President Jeffrey Schmidt made headlines Thursday when he said most of the goals mandated by the Federal Reserve had recently been met. Governor Schmidt emphasized the need to shrink the Fed's balance sheet and suggested that interest rate policy is moving closer to long-term equilibrium. He pointed out that future rate cuts should be gradual and based on economic indicators.
- The China Foreign Exchange Commission (CFXC) on Monday pledged to support the Chinese yuan at a meeting held in Beijing on Monday under the guidance of the People's Bank of China (People's Bank of China). Separately, the People's Bank of China and the State Administration of Foreign Exchange (SAFE), China's exchange regulator, announced that the macroprudential adjustment parameter for cross-border lending will be raised from 1.5 to 1.75 from January 13, 2025.
- “Interest rate and reserve requirement ratio (RRR) tools will be utilized to maintain sufficient liquidity,” People's Bank of China (Central Bank) Governor Ban Gongsheng said on Monday. Kousei reaffirmed China's plans to widen its budget deficit and stressed that China will remain the driving force behind the global economy.
Australian dollar remains below 0.6200, upper bound of descending channel
The AUD/USD pair was trading around 0.6190 on Wednesday, maintaining a bearish outlook as it remains within a descending channel on the daily chart. The 14-day Relative Strength Index (RSI) remains above the 30 level, indicating a recovery from the oversold situation.
The AUD/USD pair faces immediate resistance at the 9-day exponential moving average (EMA) at 0.6193, followed by the 14-day EMA at 0.6207. The more important resistance level is near the top of the descending channel, at approximately 0.6220.
In terms of support, the AUD/USD pair may test the lower end of the descending channel, near the 0.5940 level.
AUD/USD: daily chart
Australian dollar price today
The table below shows today's percentage change in the Australian Dollar (AUD) against major listed currencies. The Australian dollar was the strongest against the British pound.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | 0.04% | -0.06% | -0.02% | -0.03% | -0.08% | -0.02% | |
| EUR | -0.02% | 0.02% | -0.08% | -0.05% | -0.04% | -0.09% | -0.04% | |
| GBP | -0.04% | -0.02% | -0.12% | -0.06% | -0.06% | -0.12% | -0.05% | |
| JPY | 0.06% | 0.08% | 0.12% | 0.04% | 0.03% | -0.02% | 0.05% | |
| CAD | 0.02% | 0.05% | 0.06% | -0.04% | -0.00% | -0.05% | 0.01% | |
| australian dollar | 0.03% | 0.04% | 0.06% | -0.03% | 0.00% | -0.05% | 0.03% | |
| new zealand dollar | 0.08% | 0.09% | 0.12% | 0.02% | 0.05% | 0.05% | 0.06% | |
| swiss franc | 0.02% | 0.04% | 0.05% | -0.05% | -0.01% | -0.03% | -0.06% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Australian Dollars from the left column and move along the horizontal line to US Dollars, the percentage change displayed in the box represents AUD (Basic)/USD (Quote).
People's Bank Frequently Asked Questions
The main monetary policy objectives of the People's Bank of China (PBoC) are to protect price stability, including exchange rate stability, and promote economic growth. The People's Bank of China also aims to implement financial reforms such as opening up and developing financial markets.
The PBoC is owned by the People's Republic of China (PRC) and is therefore not considered an autonomous institution. The Secretary of the Chinese Communist Party (CCP) Committee, appointed by the President of the State Council, and not the Governor, has significant influence over the management and direction of the People's Bank. However, Pan Gongsheng currently holds both of these positions.
Unlike Western countries, the People's Bank uses a broader range of monetary policy instruments to achieve its objectives. Key tools include the 7-day reverse repo rate (RRR), medium-term lending facility (MLF), foreign exchange intervention, and reserve requirement ratio (RRR). However, the Loan Prime Rate (LPR) is the benchmark interest rate in China. Changes to the LPR will have a direct impact on the interest rate you have to pay in the market on your loan or mortgage and the interest paid on your savings. By changing the LPR, the Chinese central bank can also influence the exchange rate of the Chinese yuan.
Yes, there are 19 private banks in China, but this is just a small part of the financial system. The largest private banks are digital lenders WeBank and MyBank, backed by tech giants Tencent and Ant Group, according to The Straits Times. In 2014, China allowed domestic lenders, fully funded by private funds, to operate in the state-led financial sector.
